- October 24, 2023
- Posted by: [email protected]
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Bitcoin (BTC) is currently experiencing a surge in its dominance in the cryptocurrency market, surpassing 49% and reaching its highest level in over two years. CoinGecko’s data reveals that Bitcoin’s dominance now stands at 49.58%, nearly three times the dominance of Ethereum (ETH), the second-largest cryptocurrency by market capitalization, which currently hovers at around 16.7%.
This steady increase in dominance, starting at approximately 38% at the beginning of the year, marks a significant rise in Bitcoin’s market share. This growth is closely tied to Bitcoin’s year-long rally, with its price surging by 81% since the start of 2023. This impressive performance has firmly established Bitcoin as a dominant force in the market.
Several factors may have contributed to this surge. First and foremost, concerns surrounding inflation, geopolitical risks, and the growing political polarization within the United States have driven investors to seek out safe-haven assets to minimize their exposure to risk. Bitcoin, with its decentralized nature and limited supply, has emerged as an attractive option for those seeking stability in times of uncertainty.
Furthermore, the prospect of a Bitcoin exchange-traded fund (ETF) receiving regulatory approval has bolstered confidence in the cryptocurrency. The approval of a Bitcoin ETF would provide mainstream investors with a regulated and accessible pathway to invest in Bitcoin, potentially attracting a substantial influx of capital into the market.
As previously reported, crypto financial services platform Matrixport has anticipated a significant Bitcoin rally if a spot ETF enters the market. Comparing this to precious metals ETFs, which currently have a market capitalization of around $120 billion, Matrixport suggests that if 10–20% of precious metals ETF investors consider diversifying into a Bitcoin ETF as a hedge against monetary debasement and inflation, we could see an inflow of $12 to $24 billion into the Bitcoin ETF.
Matrixport stated, “If Tether’s market cap increases by $24 billion, acting as a proxy for potential ETF inflows, Bitcoin’s price would rise to $42,000, representing a conservative estimate.” Additionally, with a larger influx of $50 billion resulting from a 1% allocation recommendation by Registered Investment Advisors (RIAs), Bitcoin has the potential to rally up to $56,000, as per the firm’s analysis.
Recently, there has been growing optimism regarding the launch of a spot Bitcoin ETF. Just last week, Coinbase Chief Legal Officer Paul Grewal expressed hope that the Securities and Exchange Commission (SEC) would soon approve a spot Bitcoin ETF. Grewal emphasized that these ETF applications should be granted under the law, citing a recent court ruling that challenged the SEC’s authority to deny Grayscale’s request to convert its GBTC Bitcoin fund into an ETF.
Bitcoin’s increasing dominance and the potential impact of a Bitcoin ETF on its price demonstrate the cryptocurrency’s growing influence in the broader financial landscape, solidifying its position as a prominent investment option and a store of value.
